Connecticut Gov. M. Jodi Rell Thursday asked the chairmen and ranking members of the U.S. House and Senate committees with oversight of the energy industry to begin an immediate investigation into possible manipulation of the price of natural gas.
Rell cited a Sept. 6 market watch report that noted the volume of natural gas moving into pre-winter storage nationwide is 23 Bcf over the five-year average and a Sept. 4 news release by Chesapeake Energy Corp. that said it was “electing” to cut production by 200 MMcf/d and reduce the number of rigs it operates because of low gas prices (see Daily GPI, Sept. 5).
“This practice, if true, is an unconscionable fleecing of U.S. citizens by natural gas suppliers who ‘elect’ to reduce production in order to drive up prices paid by their captive customers,” Rell said. “We have been told over and over again that the shocking price increases are the result of forces beyond anyone’s control: hurricanes, unexpected demand spikes, refinery problems — almost anything, in fact, except a deliberate attempt to manipulate the market. Yet the evidence suggests otherwise.”
This week, she noted, OPEC oil ministers said they would increase oil production slightly to avoid making the global economic slowdown any worse. “These countries — not all of whom are diplomatic allies of the United States — recognize the need to avoid exacerbating economic problems. Why don’t our own country’s natural gas producers get it?”
Rell’s letter was directed to Senate Energy and Natural Resource Committee Chairman Jeff Bingaman (D-NM), ranking member Pete Domenici (R-NM), House Energy and Commerce Committee Chairman John Dingell (D-MI) and ranking member Joe Barton (R-TX). All seven members of the Connecticut congressional delegation also received the letter.
Rell noted that Americans “have been more than patient over the past few years with the spiraling costs of their oil, natural gas and electricity…They have been assured by the energy companies — and by the federal government — that the escalations are the result of forces outside of any government control. That assurance rests in large measure on their faith that the government will ensure their costs are not artificially inflated for the sake of naked profit.”
She said allowing companies to remove natural gas supply from the market, “to take deliberate, considered actions to promote higher prices, is an outrage.” She said she recognized that gas companies are industries seeking to maximize shareholder value. However, “they are also regulated by government and provide a critical utility to the citizens and the economy…”
Rell pointed out that federal energy statistics show the residential price per Mcf of natural gas “has increased a staggering 169% in the last five years.” The June 2002 price was $9.58/Mcf; the June 2007 price was $16.22, she said. She said wellhead prices reflected similar trends: the June 2002 wellhead price per Mcf was $2.96; the June 2006 price was $5.80; the June 2007 price was $6.86.
©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |